PulteGroup, Inc. PHM announced a 10% hike in its quarterly cash dividend, reaffirming its commitment to boost shareholders’ value. This strategic move marks the sixth yearly increase in its dividend since 2019.
This is one of the top 10 homebuilders that raised the quarterly dividend payout to 22 cents per share from 20 cents. The amount will be paid on Jan. 3, 2025, to shareholders of record as of Dec. 17, 2024. Impressively, PHM has doubled the per-share payout in the past six years.
Based on yesterday’s closing price of $129.44 per share, it had a dividend yield of 0.6% and a five-year annual dividend growth rate of 11.8%.
Enhancement of Shareholder Value
Since 2018, PulteGroup's board of directors has adopted a regular quarterly cash dividend policy. This solid capital allocation strategy — a testimony to the company’s stability amid the prevailing macroeconomic woes — drives long-term sustainable growth and shareholders’ value.
In the first nine months of 2024, the company declared cash dividends totaling $126.2 million, up from $106.8 million in the comparable year-ago period.
PulteGroup is also highly active on the buyback front. In the first nine months of 2024, the company repurchased 7.6 million shares under the repurchase authorization for $880 million. On Sept. 30, 2024, it had the remaining authorization of $1 billion in shares.
Investors always prefer a return-generating stock. A high-dividend-yielding one is highly coveted. Stockholders are always looking for companies with a track record of consistent and incremental dividend payments.
Can PHM Sustain Its Dividend Hikes Streak?
In the past year, PHM’s shares have gained 48.8%, demonstrating impressive resilience amid volatility and mixed industry data. This performance surpasses the Zacks Building Products - Home Builders industry’s 36% rise, as well as the broader Construction sector's 43.2% increase and the Zacks S&P 500 Composite's 33% growth.
Image Source: Zacks Investment Research
Notably, PHM has also outpaced other leading homebuilders like Lennar Corporation LEN, D.R. Horton DHI and Meritage Homes Corporation MTH.
PulteGroup has presented resilience in the overall business amid tepidness among buyers due to affordability. In third-quarter 2024, its earnings grew 16% on 12% higher homebuilding revenues. For fourth-quarter 2024, the company expects to close 7,900-8,300 homes, depicting growth from 7,615 homes closed in the year-ago period.
Recently, the Federal Reserve announced a quarter-point reduction in its benchmark interest rate to a range of 4.5-4.75%. This decision marks the second consecutive rate cut, following a half-point reduction in September, as the Fed aims to stimulate economic growth amid cooling inflation and a moderating labor market.
With this rate cut, the housing market could see a resurgence in demand, with anticipated mortgage rates decreasing in the near future. PulteGroup, which has a strong market presence, mainly focuses on strategic investments and favorable valuation, which suggests it is well-positioned to capitalize on this boost. (Read more: Playing PulteGroup Stock as Fed's Rate Cut Sparks Housing Boost)
Zacks Rank
PHM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
A brief discussion of above-mentioned stocks’ recent earnings release.
DHI reported fourth-quarter fiscal 2024 (ended Sept. 30, 2024) results, with earnings and revenues missing Zacks Consensus Estimate and decreasing on a year-over-year basis. D.R. Horton’s quarterly performance fell short of expectations primarily due to high mortgage rates and buyer hesitancy.
LEN reported third-quarter fiscal 2024 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, revenues increased, given the company’s emphasis on maintaining a steady production rate to drive sales momentum. Lennar strategically utilized pricing, incentives, marketing expenditure and dynamic pricing insights to ensure steady sales volume despite fluctuations in interest rates.
MTH reported third-quarter 2024 results, wherein earnings and total closing revenues topped the Zacks Consensus Estimate but declined year over year. This is the seventh consecutive quarter of earnings and revenues beat.
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Lennar Corporation (LEN) : Free Stock Analysis Report
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
Meritage Homes Corporation (MTH) : Free Stock Analysis Report
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